The Financial Ombudsman Service has upheld a case against St James’ Place Wealth Management and ordered the firm to pay a customer £1,000 to reflect the “distress and inconvenience” caused to his retirement plans.
The client, known as Mr S, complained when his deferred pensions, valued at more than £500,000, were transferred in 2012 his adviser did not discuss the implications of the lifetime allowance with him.
While mention of the lifetime allowance was included in a document, Mr S believed if the issue had been discussed he would have stopped his personal pension contributions and redirected them into alternative tax efficient investments, adding the tax charge he will most likely suffer on the personal pension contributions between 2012 and 2014 should be calculated and compensated for by SJP.
Mr S said when he was made aware of the lifetime allowance, two years later, he immediately stopped the pension contributions.
A Fos adjudicator who assessed the complaint ruled the adviser should have discussed the lifetime allowance in 2012, explaining if a discussion had occurred, Mr S would have taken the same course of action as he did in 2014.
“However, at this point in time there was no evidence that a loss had occurred and it was not clear that a loss would occur at retirement given the number of outside factors that could affect the matter,” wrote the adjudicator at the time.
Factors such as the future level of the lifetime allowance, tax relief, investment performance and taxation might also apply to the alternative investments which Mr S asserted he could have used instead for the contributions, the ombudsman added.
Overall, while the ombudsman did not consider Mr S had suffered a financial loss but Fos stated SJP had made an error in not discussing the lifetime allowance in 2012 and recommended a payment for the distress and inconvenience caused by the error.
SJP accepted the adjudicator’s findings and agreed to a payment for distress and inconvenience, however Mr S did not accept the Fos ruling.
Ms S stated while his financial loss could not be measured precisely, it should not be disregarded entirely.
Mr S also argued it did not seem reasonable that an adviser could give unsuitable advice, yet a consumer not be compensated.
The adjudicator responded, pointing out that the pension fund’s value was less than the lifetime allowance at the time the advice was given in 2012.
The contributions that were made to the pension between 2012 and 2014 have not been lost and remained within the fund, added the adjudicator, plus there is still between 10 and 20 years before Mr S can retire.
Following Mr S’ appeal, ombudsman Adrian Hudson reviewed the case and came to the same conclusion as the adjudicator, for broadly the same reasons.
Mr Hudson said: “In my opinion, while SJP had the section (on lifetime allowance) into the report there is no evidence that it was discussed in detail with Mr S.
“I note that Mr S has been offered £1,000 by SJP and in my opinion this is appropriate and I do not consider that any further sum is warranted.”
peter.walker@ft.com
